MicroRNA biogenesis is a stepwise process. The primary transcripts encoding miRNA (pri-miRNA) are cleaved consecutively by two RNase III enzymes - Drosha in the nucleus and Dicer in the cytoplasm - to generate mature miRNAs. Applying next generation sequencing technology together with reporter based functional assays, we have found that Dicer induced imprecise cleavage events around the expected sites, generating a pool of miRNAs with heterogeneous start positions affecting their functions in cells. We also created a set of Dicer mutants based on structure driven hypothesis and will test their impacts on the accuracy of miRNA biogenesis. A parallel study on Drosha is currently ongoing. To elucidate the molecular mechanisms governing cleavage fidelity, we have set up a collaboration with Dr. Xinhua Ji, an expert in crystallography, to gain structure insights of these processes. DNA-directed RNAi (shRNA expressed from plasmids) is more desirable than traditional synthetic siRNAs in many applications. It is preferred or required in genetic screens and specific RNAi approaches in gene therapy settings. However, the application is hampered due to unwanted off-target effects, a major source of which originates from heterogeneous products of shRNA processing in vivo. Our work on Dicer processing has established the loop-counting rule, which laid the groundwork in designing Pol III driven pre-miRNA-like (first generation) shRNAs free of heterogeneous processing. Together with knowledge of Drosha processing gained, we are developing strategies in designing safer pri-miRNA-like (second generation) shRNAs, which can be expressed with a Pol II promoter and are amenable to more transcription controls.